Reigning champion ... Cate Blanchett won best actress for her performance in Shekhar Kapur's Elizabeth: The Golden Age.

Shekhar Kapur is no ordinary film director. Take this from the blog on his website: "I am learning not to direct my films. I am learning that I am merely the gardener." Or, even more bizarrely: "To watch myself moving now seamlessly from male to female and back is such a fascinating observation." You can't imagine Howard Hawks saying that.

Kapur has just directed - or perhaps cultivated - Elizabeth: The Golden Age, the sequel after almost a decade to Elizabeth, which made a star of Cate Blanchett. Sequels are notoriously dangerous. Why do it? "As I was ending the last film I was already thinking about a second one," he says. "There was no absolute intention, but there was a desire. You've let loose a little Pandora's box there as a storyteller, and you have to take it further."

Kapur, who was born in pre-partition northern India and is based in Mumbai, is an unlikely interpreter of Tudor history, and of that seminal moment in our island story - the repulsing of the Spanish Armada. But that was production company Working Title's stroke of genius - to ask an outsider to take on the much filmed, much venerated figure of Elizabeth.

"I had had a big success with Bandit Queen and was being offered a lot of films," recalls Kapur, "mainly action films and westerns. I hated history and knew nothing about Elizabeth except that she was a renaissance queen and a virgin queen, so I was surprised to be approached. The producers thought of me because they were afraid of making a regular costume drama, and were attracted to the fact that in Bandit Queen I hadn't followed normal cinematic grammar."

The leftfield choice worked brilliantly in the first film, which was a critical and commercial success. Kapur collaborated with British scriptwriters who, he says, kept him "tethered to reality", but his fresh perspective felt new and original. "When they first approached me it was odd because period drama doesn't attract me," he says. "The British film that interested me at the time was Trainspotting. So when we started shooting, the joke was that this was the Trainspotting version of British costume drama."

Kapur compares taking on Elizabeth to Richard Attenborough tackling Gandhi. "I couldn't have made a film about Gandhi," he says. "I couldn't have carried the burden of that story. It's too much part of my psyche. Maybe it would have been the same for some British directors making a film about Elizabeth."

The idea driving the first film was virginity. "We chose to see virginity as a political statement rather than a historical fact," he says. In The Golden Age, the central idea is the difficulty of being a living icon. He says he drew on parallels with Indira Gandhi for the first film, and with Princess Diana for the second. "If you can't see our own times and lives in a film," he says, "there's no reason to make it."

The problem with The Golden Age is the obvious one - it is Elizabeth mark two. Having surprised us once with his bold and original vision, his framing of warm-blooded people in cold, stony settings and filming from vertiginous angles, Kapur is largely repeating himself. In 1998 he deconstructed costume drama, but you can only pull that trick off once. The Golden Age cost twice as much to make as Elizabeth but is only half as good and has had a tepid reception in the US. Time for another of Kapur's dictums: "I am far more comfortable with failure than I ever will be with success."

This must have come in useful on his previous film, The Four Feathers, made in 2002, which was a disaster on an epic scale. It wasn't entirely Kapur's fault. He and the producers, Paramount and Miramax, were already at odds over how the film should be pitched. "To the studio it was a boys' adventure," he says. "To me it was an anti-colonial statement. Me, the writers, the producers and the studio needed a little more time to understand what the intentions were behind making that film."

What Kapur doesn't do is make dismally competent three-star movies. He aims high, thinks crankily. We talk about a possible completion of his projected Elizabeth trilogy. "There's a story that Elizabeth stood for 12 hours when she thought she was going to die," he says. "She thought if she lay down she would die. I find that very interesting. You rule by divine right, you think of yourself as divine, now suddenly you have to become mortal. I'd like to shoot a film of Elizabeth in those 12 hours reflecting on her life." Given that The Golden Age looks unlikely to enjoy a gilded run, would a third film be wise - or even fundable? Oddly, since he envisages scaling down the budget and making an "intimate, independent film, not a studio picture", perhaps it will be.

Kapur's next project, though, will be something closer to home: a deeply political film called Water, to be made in India but in English. "The story is set in 2025 in a city of about 20 million people that has practically run out of water," he says. "Whatever water that exists belongs to the 10-15% of very rich people, and they discover that if there is a shortage of water it's a very powerful position to be in, so water is used as a weapon of economic, social and political power." He hopes it will tap into the new Bollywood, which is starting to make contemporary films for a worldwide audience.

As a commuter between two cultures and two film industries, Kapur senses a change in the global balance: western pop culture, he reckons, is running out of steam; the Asian consumer will soon be king. "There's a lot of imagination in Asia, and I believe that the next Google will come from there, and the next Pixar," he says. "I believe that the great new media companies will come out of Asia and surpass the big media conglomerates that exist right now in the west."

As well as being a director, Kapur is an entrepreneur. He started a successful comic book company, now co-owned by Virgin, that generates characters to be franchised in films and computer games, and is now helping to set up an investment fund that will "unlock the creative potential" in Asia. He co-produced Bombay Dreams, having introduced Andrew Lloyd Webber to AR Rahman, and is putting together a musical for a casino in Las Vegas. Doesn't all this make him a businessman rather than a film director?

"No, I don't control these companies," he says. "But in directing films you also have to be an entrepreneur. Soon our budgets will be $250m or $300m, and to convince people to put that in you might have to have the title 'negotiated by' rather than 'directed by'."

Kapur was born into a middle-class family in 1945, did an economics degree at Delhi university, and in his early 20s moved to London to become an accountant. Initially a "career junkie", he got caught up in the "cultural revolution" of late-60s London and quit his job at Burmah Oil. "If I had not been in London at that time, I would probably still be an accountant," he says. "Everybody was re-evaluating the idea of what life meant, and being taught to be fearless. It gave me the confidence to go back to India, and say, 'I'm not going to be an accountant any more.'" He became an actor, model and chatshow host, finally making it behind the camera in the 80s. "I've never looked at film-making as a career," he says. "I've looked on film-making as an adventure. When you come down the mountain, you get ready to climb again".